Consultancy Mercer has criticised the European Insurance and Occupational Pensions Authority (EIOPA) over what it perceives as its lack of consideration on the issue of deficit funding in the IORP Directive consultation.
Numerous responses published so far have focused on the damaging effect the introduction of Solvency II would have on pension schemes, which partner Deborah Cooper noted was the result of the consultation overlooking an "absolutely fundamental" aspect of regulation.
"The consultation goes into great detail on how assets and liabilities should be measured, but contains nothing substantial about the steps that have to be followed if a scheme's assets fall short of its liabilities", Cooper said.
"This is absolutely fundamental to the regulatory process and highlights one of the key differences between a pension scheme and an insurance company."
She criticised the fact the European Commission had set EIOPA a goal of implementing Solvency II "rather than improving the regulation of pension schemes per se". "The lack of attention given to action over underfunded schemes speaks volumes", she said. Cooper went on to speculate that the application of Solvency II would transfer power of company budgets to individual pensions regulators.
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